In addition, heading into summer, there’s a pent-up demand as people want to travel. Because prices are high, they’re more likely to travel by car. And many people are returning to driving to the workplace.
While there are other trends that could be a drag on demand — namely a hybrid workforce spending less time commuting, high gas prices leading to people wanting to keep their cars parked and economywide inflation driving up the price of all goods and services — they are being overcome by the other trends.
“All of that, I believe, is going to continue to bode well for the automotive aftermarket,” Genuine Parts Co. Chairman and CEO Paul Donahue said Thursday (April 21) during the company’s quarterly earnings call.
Growth in the Online Sales Channel
The company reported double-digit growth in auto parts sales to commercial customers — auto repair shops, fleets, governments and other wholesale customers — and a high single-digit increase in sales to retail customers.
Sales to retail, do-it-yourself (DIY) customers continue to trend above historical growth rates, driven by enhanced in-store merchandising, improved product assortment and digital initiatives, Donahue said.
The company’s online sales channel has seen a 50% increase over the past year.
“Our technology initiatives are building momentum,” “The teams are gaining positive traction in our efforts across B2B digital, inventory store systems, payments and workforce management platforms,” Genuine Parts Co. President William P. Stengel said during the call.
During the quarter, the company also focused on emerging automotive technology, holding its first emerging tech supplier council session in order to share ideas with partners, and adding inventory to service the electric vehicle (EV) market.
BNPL Driving Higher Average Order Values
The company’s buy now, pay later (BNPL) option has been well received and is driving higher basket sizes both online and in-store, Donahue said. Genuine Parts Co. is now launching that option in other global markets as well.
The BNPL option is predominantly used by retail customers but has applications for commercial customers in the future, Stengel said. It’s still in pilot and was just recently rolled out online but the results have been encouraging.
“So, it’s in its early days, but something that we’re excited about as it relates to acquiring new customers and driving average order value, which is typically higher than what we’ve seen in our core business,” Stengel said.
Inflation May Boost Sales
Looking ahead, Stengel said that inflation could lead people to buy auto parts and use the parts themselves in an attempt to save money on maintaining and repairing their vehicles.
“I don’t think the general population is going to get real proficient at changing out their own brakes, but certainly more basic-type projects, car care products, will continue to see a good lift in the back half of the year,” Stengel said.
When it comes to the products themselves, the company has not seen consumers trading down to lower-priced parts — the growth it saw during the quarter spanned across most product categories, Donahue said.
“With our good, better, best strategy, we’re well prepared, if we do see consumers begin to trade down to the value lines — and we’ve seen that in the past, when times get tough, they will trade down — but we did not see much of that in Q1.”